Posted on 02/01/2016 8:18:47 AM PST by prisoner6
1/31 - Once again U.S. Senator John McCain [R-AZ] has his crosshairs set on the Jones Act with an amendment he intends to attach to a proposed energy bill that would eliminate the U.S. build requirement for tankers involved in U.S. coastwise trade.
McCain hopes to attach the amendment to bill S. 2012, also known as the Energy Modernization Act of 2015, which seeks to provide for the modernization of the energy policy of the United States, and for other purposes.
The submitted amendment from McCain would change section 12112 of title 46 of the United States Code (46 U.S.C. 12112 – Coastwise Endorsement) by eliminating the U.S. build requirement for oil and gasoline tankers involved in U.S. coastwise trade.
S. 2012 is an original bill sponsored by Senator List Murkowski [R-AK] from the Committee on Energy and Natural Resources and was first introduced in September. The bill may be up for consideration on the Senate floor next week.
The amendment is the latest attempt by McCain to repeal parts of the Merchant Marine Act of 1920, aka the Jones Act, requiring that all goods shipped between ports of the United States be carried by vessels built in the United States and owned and operated by Americans.
In 2015, McCain attempted to attach a similar amendment to a Keystone XL pipeline bill, again seeking to eliminate the U.S. build requirement of the Jones Act. The attempt was met with fierce criticism from industry stakeholders and lawmakers alike, and the bill ultimately passed without McCain’s amendment attached.
Despite tough opposition, McCain has vowed the eventual full repeal of the Jones Act, describing it as “antiquated law†that hinders free trade and raises prices for American consumers.
The Jones Act has plenty of holes in it already.
With the Jones Act in place we have the absurdity of exporting gasoline from Galveston to Rotterdam and importing gasoline from Rotterdam to New York because it’s cheaper than operating a tanker route from Galveston to New York.
The Jones act has crushed America’s ability to compete in shipbuilding.
It stipulates that:
* only US-flagged vessels can move between America ports.
* a ship can be US-flagged only if it is built in the US, owned by US interests, and manned by a US crew.
A US-flagged ship must bear the burden of US corporate taxes, from which foreign shipping companies are largely exempt (completely exempt if those companies register with a tax-haven like Panama).
Also: the requirement that the crew of US commercial vessels be US merchant mariners dramatically raises the cost of labor and further reduces the competitiveness of the US shipping industry.
Case in point. Japan has roughly the same level of labor cost as America. But the price of ship construction per ton in 2008 was:
* $770 per ton in Japan
* $9900 per ton in the US
That’s like twelve times more!
The Jones Act has cut the US shipping industry off from the free market, forcing it to comply with a crushing regulatory and fiscal burden while providing it with a captive market. Another American industry turned into a vast welfare client.
I have no doubt that Murkowski and McCain are carrying out some shakedown here, and that the Jones Act is safe. But the Jones Act needs to go.
Right we can contract out the logisitical support for the US Navy to China
With the act in place, the Canadian National RR bought the entire iron ore shipping fleet of US Steel’s “Great Lakes Fleet,” based in Duluth, MN.
The year prior to the purchase, a Japanese grain trader was barred from buying a barge company operating on the Mississippi and Ohio Rivers.
The US should be the world’s greatest Tax Haven.
Pass the Fair Tax!
“More US jobs leaving thanks to Sen. McCain and the GOPe.”
Those jobs left a long time ago. The Jones Act demonstrates that attempts to ‘save jobs’, particularly ‘union’ jobs backfires.
But that's a minor impact compared with the indirect burdens that the Jones Act imposes on American businesses and taxpayers who (among so many other things) pay for the Navy.
Ah well, at least US Navy logistics enjoys extreme economies of scale. No other Navy remotely like it.
Saying all that, the best way to take the sting out of the Jones Act would be to remove the heavy burdens of corporate taxation, Obamacare, arbitrary and complex regulation, endless legal vulnerability and environmental restrictions that prevent so many from being able to create an honest buck in the US.
Then the US shipping industry, like other industries, would be able to align itself with market forces and the insane cost of US-flagging wouldn’t be an issue anymore.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.